Is doing something about inequality a choice between bash the rich v tackling poverty? Some thoughts for Blog Action Day

October 16, 2014

     By Duncan Green     

Today is Blog Action Day, and we’re all supposed to blog about inequality. Ricardo Fuentes (Oxfam Head of Research) & his team are even marking the day by kicking off a 85 v 3.5bn cartoonnew inequality-themed blog, Mind the Gap – check it out.

I’ve already done my more general call to arms for BAD, so here’s something more in keeping with this blog’s usual tone of navel-gazing uncertainty: I’m a bit baffled by the stuff I’ve been reading recently on inequality and the post-2015/Sustainable Development Goals, and in particular what issues to focus on if you are ‘tackling inequality’. Allow me to spread my confusion (and ask you to vote, right).

Claire Melamed of ODI has a piece discussing inequality and the post-2015 agenda, called ‘The other half: To end inequality, we must realise that it isn’t about the rich, it’s about the poor. And we know almost nothing about them’. She asks:

‘What does it matter to an impoverished farmer in South Sudan if 85 people hold as much wealth as half the world’s population? If those 85 people gave everything away, would that actually help the farmer? The problem, I have come to think, is that there are two very different ways of thinking about inequality. The first is all about the rich. The second is all about the poor. The first is the one we usually hear about. The second is the one that really matters.’

Claire reckons that all the focus on the rich is a distraction, generating lots of outrage but ‘a dearth of actual policy ideas’.

She recognizes that more redistributive taxation is one such idea, but argues:

‘If governments make very rich people a bit poorer by changing tax or inheritance rules, who’s to say the money won’t just be spent on missiles or grandiose infrastructure projects or other things that people don’t really want, and which certainly won’t help to tackle extreme poverty? ‘

Instead, she argues ‘we need to look, not at the top of the wealth distribution, but at the bottom; not at the inequalities that make people rich, but the ones that keep people poor.’

Class_War 2_250px

Her big idea is that the position of poor people ‘depends to a remarkable degree on the groups that they belong to. Where do they live? What is their ethnic group or religion? Do they have a mental illness or a physical disability? What family do they come from?’

So the kind of inequality we should be addressing is group-based inequality, which basically comes down to affirmative action and supporting the empowerment of marginalized groups.

At which point, I headslapped and said ‘hold on – that’s the Chronic Poverty agenda, which another bit of ODI has been working on for a decade.’ Not sure her colleagues will be best pleased to hear that ‘we know almost nothing about them’.

Then I took a look at Save the Children’s new report ‘Leaving No One Behind’, which argues for ‘Embedding equity in the post-2015 framework through stepping stone targets’. But in turns out that ‘Stepping stones’ are just a catchy phrase for interim benchmarks for the disadvantaged groups – we’re back to chronic poverty again.

So is that it – does all this fuss about inequality just boil down to forgetting about the excessively rich and powerful, and getting back to addressing chronic poverty through a combination of targeting, anti-discrimination and group empowerment? That view seems to fit pretty much with the World Bank’s ‘shared prosperity’ agenda, which neatly sidesteps inequality to focus on ‘fostering income growth of the bottom 40 percent of the population in every country’.

That seems like a bit of a cop-out to me – surely we should do both? Recovering and strengthening the sense of social responsibility of the powerful is important, as is attacking the chronic poverty of the people at the bottom of the heap – why can’t they be mutually reinforcing? At the top, the effort includes more and fairer redistribution through taxation, but also thinking about ‘predistribution’ – some economic models pile up inequality by, for example, favouring capital intensive sectors, whereas others generate more benefits to the poor by creating jobs or involving small farmers in value chains. Then there’s the need for constraints on elite power and political capture – when was the last time a development organization talked about the rules governing lobbying or financing political campaigns, North or South? Put them all together and the overall task becomes something like supporting the strengthening of the social contract between (all) citizens and the state.

Don’t get me wrong, I think the chronic poverty agenda is really important (that’s why I’m on the advisory board of the Chronic Poverty Action Network). But I felt their most recent

Erm, probably not

Erm, probably not

Chronic Poverty report lost the plot a bit on the SDGs: instead of arguing that chronic poverty is what is left when all the relatively easily reducable poverty has been tackled, and should thus be at the core of ‘getting to zero’ in the post 2015 process, the report went off at a tangent about what to do about people who are not chronically poor, but ‘churn’ in and out of poverty over the course of a year. That’s interesting and important, but people who churn are by definition, not the chronic (i.e. permanent) poor.

So within ODI, Claire Melamed (who runs the team on growth, poverty and inequality, but mainly does post 2015 stuff) is advocating putting chronic poverty at the heart of the SDGs, while the actual chronic poverty people are talking about something else. And anyway, I disagree with both of them, because we should be addressing both the top and bottom of the inequality equation. Feels like time for a poll (if only to put Tim Gore out of his misery for getting the ‘wrong’ answer on the last one).

October 16, 2014
Duncan Green